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April 13 2015, 8.20am GMT


AUDUSD hit levels last seen in 2009 as China’s surprise export figure showed massive economic slowdown.

The Aussie fell 1.1% on Monday’s Asian trading against the greenback as Australia’s currency, which tends to reflect trading in China, was hit by China’s negative export data.

Exports were expected to rise by 12%, however, the reality is that trade from the second largest economy in the world slipped a surprising 15%, reporting levels closer to a year ago in March 2014 at minus 18.1%.

China’s export data year on year

china exports

The figure came in stark contrast to last month’s figure of plus 48.3%, which encouraged the Aussie to monthly highs of 0.79366. Though this high also took into consideration the Reserve Bank of Australia’s (RBA) decision on April 9 to maintain the country’s interest rate at 2.25%, a level that the bank dropped to in February this year from 2.5% which was a rate that was held since August 2013.

The RBA released a statement that explained the reason behind the decision; ‘Financial conditions are very accommodative globally, with long-term borrowing rates for several major sovereigns at all-time lows. Financing costs for creditworthy borrowers remain remarkably low.’

With China’s economy slowing down in terms of exports and the negative trade balance also reported Monday morning, the AUD will be effected negatively. China’s Trade Balance for March reported 3.08 billion versus expectations of 45.35 billion and previous of 60.60 billion.

Much of the fear raised on the Australian dollar is also due to import data from China which plunged a further 12.7% versus expectations of minus 11.7% and last month’s figure of minus 20.5%.  However, in February Reuters reported Li Xinchuang, executive vice secretary-general of the China Iron and Steel Association, to say, “The share of China's iron ore imports taken by Australia and Brazil will expand to more than 80 percent this year from 77 percent in 2014.” Adding, “Li expects the country's imports to rise 7.1 percent this year, reaching 1 billion tonnes for the first time.” The trade data from China is not transmitting this positive outlook and companies such as Vale and BHP Billiton will be hoping for the Chinese government to address the economic slowdown with further easing on monetary policy to aid equities.

MT4 chart: AUSUSD showing 6 year lows


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